The Achilles Heel of the Gig Economy is that Workers Can’t Make Enough Money

New Orleans   Uber is the canary in the coal mine. After years of listening to the reports that held up Uber as the herald of the future, creating a new business model where an application would substitute for an employer, the accounting is finally coming due. Its drivers were touted as the vanguard of the gig economy, complete with claims that this was what the “new” worker really wanted from employment. Now it turns out Uber may be the canary dying in that coal mine because the Achilles heel of the gig economy is increasingly revealed: it’s not sustainable. No matter what Uber and others want to call them, they depend on workers, and workers are voting with their feet that they can’t make it on temporary work, so they have to keep moving, and that means working for another company. The gig economy doesn’t work when people can’t make a living on Uber and similar gigs.

Uber has lost $4 billion over the past 18 months for lots of reasons, but largely because it can’t make its workforce either happy or stable. They are like a bait-and-switch operation offering incentives, prizes, tips, and extra bonuses, but increasingly hitting the brick wall where their drivers are realizing they still are barely making minimum wages per hour. In fact the Wall Street Journal reported that Uber cooperated with a study done by a New York University professor that,

“found that no matter which directions fares go, drivers invariably take home about the same earnings over time…[because] When there is a fare cut, drivers’ pay per trip falls but riders flood the service, offering more business. A price rise eventually lures more drivers than Uber needs and scares away riders. The changes are short-lived as an equilibrium is reached after about eight weeks, and drivers’ average pay comes out the same.”

This means that Uber, the harbinger of the future, “must lean heavily on pricey incentive payments – cash for completely a certain number of rides a week, say – to bring driver earnings above what typically amounts to around minimum wage.”

Wow! I’ll guarantee you, because I know many once upon a time Uber and Lyft drivers that join on the promise of higher wages, and they leave when they finally realize that paying for gas, their car, insurance, and then looking at their pay, it just doesn’t add up. Uber is stuck on a business model that is based on exploitation of workers, that business model, like most of the vaunted “gig economy” is unsustainable, because workers fooled at first, are not fooled forever when it comes to the empty pay envelope.

Uber and the rest of these companies are not a new model, but an old one. They are labor contractors trying to sweat workers with a new tool, but an old scam. This is a piece rate scheme. Some workers can make it, but most can’t. Worse, all of these companies are pushing off their responsibilities as employers to provide social security, unemployment and even bare bones benefits, but making the workers who are their lifeblood into subcontract labor. In Europe and some US cities, that part of the hustle is also falling apart as Uber is increasingly declared an employer.

Workers are being gigged by this model. The canary is dying in red ink. A business model that depends on exploiting workers is doomed, even if it takes some time to die.


Musicians are Permanent and Precarious Gig Workers

Grenoble  We have spent a lot of time trying to figure out if there are effective ways to organize informal and precarious workers. This was a front line topic for our organizers from around the world when we gathered in Paris recently. A pilot is making progress with hotel housekeepers and cleaners in Lyon, France. In the UK, our ACORN tenants’ union is increasingly getting questions about whether we can be their union on the job as well. Certainly in the United States this is part of our daily work, and we are soon launching a project in New Orleans among itinerant and precarious hospitality workers. Certainly we have experience in this area in organizing home-based workers in childcare and home health, as well as street vendors and waste pickers in India and elsewhere.

The constant publicity and attention given to the gig economy and its economic challenges questions whether or not there is any consensus that such an economy can produce wage security. A unique plan under discussion by ACORN’s New Orleans affiliate revolves around whether or not people can save their homes and livelihoods by adding additional, affordable housing units on their existing home lots in a different kind of in-fill development. Others are even trying AirBnb, if they can master the confusing local regulations. Uber, under pressure, seems to be adding a way for drivers to collect tips and calculating refunds where it scammed drivers on taxes.

I’m skeptical both philosophically and practically. At home or on the road, email is still everywhere, and as the manager of both radio stations like KABF and WAMF and performance venues like Fair Grinds Coffeehouses, I am constantly, and creatively, being solicited by aspiring musicians to play their music or allow them space on the calendar, despite the fact that the stations are noncommercial and playing the coffeehouse means busking for tips. I’m sympathetic to both their dreams and ambitions, as well as their plight, which sometimes includes where they can get cheap housing or free food, even though, as nonprofits and social enterprises, we are too strapped to be helpful without robbing Peter to pay Paul ourselves,.

All of which pushed me to read How Music Works by former frontman of Talking Heads and longtime musician and artist, David Byrne. This is a love letter to music and a Cook’s tour of his career, but the book is also an invaluable primer on the business of music, and there’s no sugar in that coffee. Byrne makes a case for how important “event” spaces and venues are in creating and supporting a music scene. I wish we could provide that, but we fall short on his standards. It is hard for us to supply food and drink to traveling musicians when that means taking food and drink out of the hands of organizers and our members around the world, but I hope he would understand that.

Byrne is clear about his situation. He’s successful and makes a good living, but he certainly didn’t get crazy Rolling Stones rich from his music or other songwriting. When he goes through the various business models on record deals, the old ACORN chant of “predatory lender, criminal offender” was ringing through my ears. On my blog we try to feature a song sent to KABF from time to time to help out the artist. Recently, I got a note from one of the musicians about whether I could link to streaming or something too complicated for me to follow so that maybe he could pick up some iTunes purchases. In a similar way, a friend recently posted on Facebook how she pledges to radio stations to fight the notion that good music and entertainment can be provided for free.

If musicians are a good example of the gig economy, then the verdict is already in, and if music does NOT pay, even when musicians are doing the work, and their work is generally valued and respected more than other precarious workers like cab drivers, cleaners, and hospitality workers, then we’re simply watching the creation of a permanent underclass, not a tech-miracle. Spin that record differently the next time you hear it.